Recent comments from Federal Reserve Chairman Jerome Powell have signaled that the U.S. central bank is unlikely to roll back interest rates in the near future, despite repeated calls by President Donald Trump.
On Wednesday, Powell stated that talk of cutting rates is premature and even suggested there could be additional hikes in the future if the economy continues to perform well. He noted that the main mission of the Fed is to “keep the economy healthy and maintain price stability,” which has been their main focus of late.
Powell’s remarks come at a time when analysts and market watchers are keeping an eye on the Fed for signs of a potential rate cut. Trump has been pushing for a rate cut in an effort to stimulate the economy, which he believes has been weakened by his own policies.
However, Powell’s comments suggest that the Fed is more focused on ensuring that the economy and inflation remain at steady levels, rather than cutting rates in an effort to give the President’s policies a boost.
The central bank’s recent ability to keep inflation in check, however, may be the reason why Powell is reluctant to make any major changes to current policy. According to recent reports, the Consumer Price Index, a key indicator of inflation which rose higher than expected in April, remains within the Fed’s target range of 2 percent.
At the same time, the current unemployment rate is also encouraging, dropping to 3.6 percent in April, which is the lowest it’s been since 1969.
Fed rate hikes are one of the most effective ways of ensuring that the economy remains healthy and stable. However, it is also important to keep an eye on inflation and unemployment to make sure the economy stays in balance.
It appears that the Fed is doing just that, as Powell’s recent comments suggest that the central bank is taking a cautious approach when it comes to making any major adjustments to their rate policy. They are ensuring that they are taking into consideration the current circumstances, making it clear that a rate cut right now is premature.